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Proposed Overhaul of China Healthcare System to Impact Medical Industry

With increasing out-of-pocket expenses and little to no support from the government, many people in China choose to not receive any medical care. Based on a national health survey taken in 2003, nearly 50 percent of people who should seek medical care do not. About 47% of urban citizens and 31% of rural inhabitants self-medicate instead of going to hospitals.

The vast majority of hospitals in China are still state-run and the costs for general medical supplies and services are controlled by the government. However, these state-run hospitals received minimal funding from the government for medical supplies and services.

Now China is planning to increase government spending so that more residents can afford medical care. The Chinese government is planning to expand and increase funding for clinics in both the rural and urban areas. In addition, the government would pay the salaries of doctors and staff. These clinics would be more primary-care focused and smaller than the larger state hospitals. Also, central and local government subsidies will be increased from about $5 to about $10 per person.

Increased government funding would lead to increased demand for various medical products, especially more basic, Class I medical devices.